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Article is a bit vague and oversimplified. So Netflix won because of network effects? and Blockbuster didn't have network effects? Blockbuster is bigger than Ne
by forkLding 8y ago
Article is a bit vague and oversimplified.
So Netflix won because of network effects? and Blockbuster didn't have network effects? Blockbuster is bigger than Netflix when Netflix was a startup and simple ripples in Blockbuster could have generated a much bigger effect than Netflix in terms of Facebook posts or Twitter messages.
Network effects don't happen because people want them to happen, network effects benefit in marketing is really just really good service that turns into lots of word-of-mouth that is spread super-fast throughout the internet whereas traditionally it would just spread in your traditional community. You can build for network effects but that doesn't mean you can get that effect.
- ghaff 8y agoThere are different network effects/economies of scale that end up getting conflated. There are often benefits to size like brand recognition, better pricing from suppliers, amortization of R&D, etc. Apple is a poster child. There are network effects where having more users actually helps to make a better product through increased data etc. (This is increasingly true with products that rely on ML and large data sets in various ways.) And then there are the eBay-type (or telephone system historically) network effects. If your auction site only has a handful of sellers (or a handful of buyers), it's more or less useless no matter how wonderful it is by other metrics.